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Tuesday, 5 April 2016

Cobbler, Cobbler, Mend my Investments!

I know a relative of mine who
opts for an Insurance policy for every investment need of his. He has a friend
who is an Insurance agent, and whenever my relative has surplus to invest, he
calls his friend and invests the amount in whatever plan his friend suggests.
So, let me ask you a simple question – is this the right approach to manage one’s
surplus monies? I am sure most of you will be with me in saying a big NO. It is
like visiting a carpenter and asking him to fix your fever. All our investments
are to be done with a certain perspective in mind. You cannot choose one asset
class for all your investments and vice-versa. For managing your investments
the right way, you need to take note of few things.

1.Qualification of your Financial
Planner/Advisor: Is your Financial Advisor aptly qualified to guide you on
your investments? Or he is simply selling you the products which give him the
maximum commission. Your investment is not to be treated as a source of more
revenue for your Advisor. You are investing because you want your money to grow
and beat inflation. So, you should go to an Advisor who is professionally
qualified to do that.

2.Are you taking holistic approach towards
your investments: You should not take your investments randomly. Each and
every investment of yours ought to have a purpose, there should be a financial
goal assigned towards it. Only if you are serious about your money, will your
financial planner be serious about you.

3.Don’t do same kind of investments every
time: Your investments should be a basket of different financial products
and not products from the same basket. That doesn’t mean you should have each
and every product available on the face of this earth. It simply means your
portfolio should be diversified enough to take care of the market highs and lows.
It should not be hugely diversified.

So, make a note of these points
and next time you visit your financial advisor, ask yourself a question – Are you
visiting a Cobbler to mend your investments?